2^nd Dec 2019 – Tom Monti – Investment Analyst

The Prime Minister of New Zealand recently announced an upgrade to our free trade agreement (FTA) with China, heralding it as “the best free trade agreement China has with any country”. This concludes three years of negotiations of the agreement that was first established in 2008.

The upgraded FTA will improve access and reduce compliance costs for our exporters into China. This includes, for example, faster border release of fresh food products. Tariffs on various paper, wood and dairy products will also be reduced or removed over time.

This marks a significant milestone in the emergence of China as New Zealand’s leading trade partner. It also comes at a time when we are witnessing our traditional trade partners (i.e. the United States and Britain) push back against globalisation; the US trade war with China and Brexit are both symptoms of this change in attitude.

The chart below shows the contribution from major trading partners to our export growth through time. It highlights the significance of China, particularly in the decade post the signing of the FTA.

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